Dave & Buster’s Reports Second Quarter 2022 Financial Results

DALLAS, Sept. 07, 2022 (GLOBE NEWSWIRE) — Dave & Buster’s Entertainment, Inc., (NASDAQ:PLAY), (“Dave & Buster’s” or “the Company”), an owner and operator of entertainment and dining venues, today announced financial results for its second quarter ended July 31, 2022.

Key Second Quarter 2022 Highlights

  • The Company completed its acquisition of Main Event on June 29, 2022.
  • The Company implemented over $11.5 million of annualized cost synergies to date that will be realized in future quarters and increased its target annualized cost synergies from $20.0 million to $25.0 million.
  • Record second quarter revenue of $468.4 million increased 35.9% from the second quarter of 2019 and increased 24.0% from the second quarter of 2021. Main Event branded stores contributed $51.4 million of revenue during the quarter.
  • Total comparable sales at Dave & Buster’s branded stores increased 9.6% compared with the same period in 2019.
  • Total comparable sales at Main Event branded stores increased 29.7% during the period from June 29 through July 31, 2022 compared with the same period in 2019.
  • Net income totaled $29.1 million, or 59 cents per diluted share, compared with net income of $52.8 million, or $1.07 per diluted share in the second quarter of 2021 and net income of $32.4 million, or 90 cents per diluted share in the second quarter of 2019.
  • Record Adjusted EBITDA of $119.6 million increased 39.0% from the second quarter of 2019 and increased 0.3% from the second quarter of 2021.
  • During the second quarter of 2022, the Company repurchased 764,988 shares for $25 million.
  • The Company ended the quarter with $591.8 million of liquidity, which includes $100.4 in cash and $491.4 million available under its $500 million revolving credit facility.

“We are pleased to report record revenue for the second quarter,” said Chris Morris, Dave & Buster’s Chief Executive Officer. “We experienced strong guest visitation and spending across both brands this quarter. Our teams continued to deliver high levels of service to our guests, while simultaneously beginning the process of integration into one company. I want to recognize the efforts of our combined teams as we work to capture the synergies from our combination and adopt best practices across our brands. While we saw substantial headwinds during the quarter from wage and commodity inflation, we remained focused on driving revenue and strong cash flow while still working to mitigate these pressures with operational efficiencies and appropriate pricing actions. We have significant upside potential and with our continued focus on innovation, growth and value creation, we are determined to deliver on that potential. We are excited about the future of this new organization and look forward to sharing our progress in the coming quarters.”

Second Quarter 2022 Results

Total revenue was a record $468.4 million, an increase of 24.0% from $377.6 million in the second quarter of 2021 and an increase of 35.9% from $344.6 million in the second quarter of 2019. Total revenue at Dave & Buster’s branded stores was $417.0 million, an increase of 10.4% from $377.6 million in the second quarter of 2021 and an increase of 21.0% from $344.6 million from the second quarter of 2019. Total revenue at Main Event branded stores was $51.4 million for the period from June 29 through July 31, 2022.

Comparable store sales at Dave & Buster’s branded stores increased 9.6% compared with the second quarter of 2019 (the Company has chosen to continue reporting comparable store sales versus 2019 in order to provide a more meaningful comparison). Walk-in comparable store sales at Dave & Buster’s branded stores increased 13.0% while Special Event comparable store sales declined 23.1% compared with the same period in 2019. Non-comparable store revenue at Dave & Buster’s branded stores totaled $84.7 million compared with $69.2 million in the second quarter of 2021 and $40.7 million in the second quarter of 2019.

Comparable store sales at Main Event branded stores for the period from June 29 through July 31, 2022, increased 29.7% compared with the same period in 2019. Walk-in comparable store sales at Main Event branded stores during the June 29 through July 31, 2022 period increased 34.9% while Special Event comparable store sales declined 1.4% compared with the same period in 2019.   Non-comparable store revenue during this period at Main Event branded stores totaled $13.5 million.

Operating income totaled $56.5 million, or 12.1% of revenue, compared with operating income of $79.2 million, or 21.0% of revenue in the second quarter of 2021 and operating income of $46.2 million, or 13.4% of revenue in the second quarter of 2019. Operating income during the second quarter of 2022 was negatively impacted by transaction costs related to the acquisition of Main Event, increases in pre-opening and stock-based compensation expenses and an impairment charge.

Net income totaled $29.1 million, or 59 cents per diluted share, compared with net income of $52.8 million, or $1.07 per diluted share in the second quarter of 2021 and net income of $32.4 million, or 90 cents per diluted share in the second quarter of 2019.

Adjusted EBITDA totaled a record $119.6 million, or 25.5% of revenue, compared with Adjusted EBITDA of $119.2 million, or 31.6% of revenue in the second quarter of 2021 and adjusted EBITDA of $86.0 million, or 25.0% of revenue in the second quarter of 2019.

Store operating income before depreciation and amortization totaled $136.7 million, or 29.2% of revenue, compared with store operating income before depreciation and amortization of $134.2 million, or 35.5% of revenue in the second quarter of 2021 and store operating income before depreciation and amortization of $99.7 million, or 28.9% of revenue in the second quarter of 2019.

Balance Sheet, Liquidity and Cash Flow

In connection with the acquisition of Main Event, the Company refinanced its existing $500 million revolving credit facility and closed on a new $850 million term loan due June 29, 2029.

The Company generated $84.5 million in operating cash flow during the second quarter, and ended the quarter with $591.8 million of liquidity, which includes $100.4 in cash and $491.4 million available under its $500 million revolving credit facility.

During the second quarter of 2022, the Company repurchased 764,988 shares for $25 million under its $100 million authorized share repurchase program.

Third Quarter 2022 Business Update

The Company’s business has continued to improve through the first five weeks of the third quarter, during which comparable store sales on a consolidated basis increased 22.1% with increases of 17.6% at Dave & Buster’s branded stores and 42.3% at Main Event branded stores compared with the same period in 2019. Consolidated walk-in comparable store sales increased 24.7% while Special Event comparable store sales declined 4.2% for the five-week period compared with 2019. At Dave & Buster’s branded stores, walk-in comparable store sales increased 20.0% while Special Event comparable store sales declined 11.9% for the five-week period compared with 2019.   At Main Event branded stores, walk-in comparable store sales increased 48.9% while Special Event comparable store sales increased 9.3% for the five-week period compared with 2019.

Quarterly Report on Form 10-Q Available

The Company’s Quarterly Report on Form 10-Q, will be available at www.sec.gov and at the Company’s investor relations website, contains a thorough review of its financial results for the second quarter ended July 31, 2022.

Investor Conference Call and Webcast

Management will hold a conference call to report these results on Wednesday, September 7, 2022, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Participants can access the conference call by dialing toll-free (877) 883-0383. The international dial-in for participants is (412) 902-6506. The participant entry number is 9220602. A replay will be available after the call for one year beginning at 6:00 p.m. Central Time (7:00 p.m. Eastern Time) and can be accessed by dialing toll-free (877) 344-7529 or by the international toll number (412) 317-0088; the replay access code 4030138. Additionally, a live and archived webcast of the conference call will be available under the Investor Relations section at www.daveandbusters.com/.

About Dave & Buster’s Entertainment, Inc.

Founded in 1982 and headquartered in Coppell, Texas, Dave & Buster’s Entertainment, Inc., is the owner and operator of 200 venues in North America that offer premier entertainment and dining experiences to guests through two distinct brands: Dave & Buster’s and Main Event. The Company has 148 Dave & Buster’s branded stores in 41 states, Puerto Rico, and Canada and offers guests the opportunity to “Eat Drink Play and Watch,” all in one location. Each store offers a full menu of entrées and appetizers, a complete selection of alcoholic and non-alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events. The Company also operates 52 Main Event branded stores in 17 states across the country, and offers state-of-the-art bowling, laser tag, hundreds of arcade games and virtual reality, making it the perfect place for families to connect and make memories. For more information about each brand, visit daveandbusters.com and mainevent.com.

Forward-Looking Statements

The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to the impact on our business and operations of the coronavirus pandemic. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by the uncertain and unprecedented impact of the pandemic and new coronavirus variants on our business and operations and the related impact on our liquidity needs; our ability to continue as a going concern; our ability to obtain waivers, and thereafter continue to satisfy covenant requirements, under our revolving credit facility; our ability to access other funding sources; the implementation and duration of government-mandated and voluntary shutdowns and restrictions; the speed with which our stores safely can be reopened and fully operated and the level of customer demand following reopening and full operations; the economic impact of the pandemic and related disruptions on the communities we serve; our overall level of indebtedness; general business and economic conditions, including as a result of the pandemic; the impact of competition; the seasonality of the Company’s business; adverse weather conditions; future commodity prices; guest and employee complaints and litigation; fuel and utility costs; labor costs and availability; changes in consumer and corporate spending, including as a result of the pandemic; changes in demographic trends; changes in governmental regulations; unfavorable publicity, our ability to open new stores, and acts of God. Accordingly, actual results may differ materially from the forward-looking statements, and the Company therefore cautions you against relying on such forward-looking statements. Dave & Buster’s intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more appropriate information becomes available, except as required by law.

*Non-GAAP Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Store operating income before depreciation and amortization, and Store operating income before depreciation and amortization margin (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that they provide useful information about operating results, enhance the overall understanding of our operating performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measures used by the Company in this press release may be different from the measures used by other companies.

For Investor Relations Inquiries:

Michael Quartieri, SVP & Chief Financial Officer
Dave & Buster’s Entertainment, Inc.
(972) 813-1151
michael.quartieri@daveandbusters.com

   
DAVE & BUSTER’S ENTERTAINMENT, INC.  
Condensed Consolidated Balance Sheets  
(in thousands)  
   
           
ASSETS   July 31, 2022   January 30, 2022  
    (unaudited)   (audited)  
Current assets:          
           
Cash and cash equivalents   $ 100,386   $ 25,910  
Other current assets     114,120     119,661  
           
Total current assets     214,506     145,571  
           
Property and equipment, net     1,149,632     778,597  
           
Operating lease right of use assets     1,330,468     1,037,197  
           
Intangible and other assets, net     956,134     384,425  
           
Total assets   $ 3,650,740   $ 2,345,790  
           
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Total current liabilities   $ 407,585   $ 311,515  
           
Operating lease liabilities     1,599,417     1,277,539  
           
Other long-term liabilities     67,681     49,881  
           
Long-term debt, net     1,219,678     431,395  
           
Stockholders’ equity     356,379     275,460  
           
Total liabilities and stockholders’ equity   $ 3,650,740   $ 2,345,790  
           

 

DAVE & BUSTER’S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
                         
    13 Weeks Ended   13 Weeks Ended   13 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Food and beverage revenue $ 156,995   33.5 %   $ 123,006   32.6 %   $ 137,921     40.0 %
Amusement and other revenue   311,364   66.5 %     254,632   67.4 %     206,678     60.0 %
Total revenue     468,359   100.0 %     377,638   100.0 %     344,599     100.0 %
                         
Cost of food and beverage (as a percentage of food and beverage revenue)     46,461   29.6 %     33,127   26.9 %     36,934     26.8 %
Cost of amusement and other (as a percentage of amusement and other revenue)     29,075   9.3 %     24,584   9.7 %     22,689     11.0 %
Total cost of products     75,536   16.1 %     57,711   15.3 %     59,623     17.3 %
Operating payroll and benefits   113,674   24.3 %     80,623   21.3 %     80,927     23.5 %
Other store operating expenses   142,440   30.4 %     105,116   27.9 %     104,376     30.3 %
General and administrative expenses     37,710   8.1 %     18,470   4.9 %     15,991     4.6 %
Depreciation and amortization expense   38,614   8.2 %     34,875   9.2 %     32,745     9.5 %
Pre-opening costs   3,913   0.8 %     1,676   0.4 %     4,723     1.4 %
Total operating costs     411,887   87.9 %     298,471   79.0 %     298,385     86.6 %
                         
Operating income     56,472   12.1 %     79,167   21.0 %     46,214     13.4 %
                         
Interest expense, net   17,118   3.7 %     13,728   3.7 %     4,605     1.3 %
Loss on debt refinancing   1,479   0.3 %       0.0 %         0.0 %
                         
Income before provision for income taxes     37,875   8.1 %     65,439   17.3 %     41,609     12.1 %
Provision for income taxes     8,787   1.9 %     12,669   3.3 %     9,253     2.7 %
Net income   $ 29,088   6.2 %   $ 52,770   14.0 %   $ 32,356     9.4 %
                         
Net income per share:                        
Basic $ 0.60       $ 1.10       $ 0.91      
Diluted $ 0.59       $ 1.07       $ 0.90      
Weighted average shares used in per share calculations:                        
Basic shares   48,831,639         48,178,611         35,407,965      
Diluted shares   49,271,521         49,229,817         36,015,710      
                         
                         
Other information:                        
Company-owned stores at end of period   200         142         130      
Store operating weeks in the period   2,171         1,817         1,674      
Total revenue per store operating weeks in the period $ 216       $ 208       $ 206      
                         
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:        
                         
    13 Weeks Ended   13 Weeks Ended   13 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Net income $ 29,088   6.2 %   $ 52,770   14.0 %   $ 32,356     9.4 %
Add back: Interest expense, net   17,118         13,728         4,605      
     Loss on debt refinancing     1,479                      
     Provision for income taxes     8,787         12,669         9,253      
     Depreciation and amortization expense     38,614         34,875         32,745      
EBITDA   95,086   20.3 %     114,042   30.2 %     78,959     22.9 %
Add back: Loss on asset disposal   154         112         406      
     Impairment of long-lived assets   1,841                      
     Share-based compensation     4,698         3,187         1,907      
     Pre-opening costs     3,913         1,676         4,723      
     Other costs (1)     13,858         135         (13 )    
Adjusted EBITDA $ 119,550   25.5 %   $ 119,152   31.6 %   $ 85,982     25.0 %
                         
(1) Fiscal year 2022 amount primarily represents costs related to the acquisition of Main Event and subsequent integration costs.    
                         
                         
The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:        
                         
    13 Weeks Ended   13 Weeks Ended   13 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Operating income $ 56,472   12.1 %   $ 79,167   21.0 %   $ 46,214     13.4 %
Add back: General and administrative expenses   37,710         18,470         15,991      
     Depreciation and amortization expense     38,614         34,875         32,745      
     Pre-opening costs     3,913         1,676         4,723      
Store operating income before depreciation and amortization $ 136,709   29.2 %   $ 134,188   35.5 %   $ 99,673     28.9 %
                         

 

DAVE & BUSTER’S ENTERTAINMENT, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
                         
    26 Weeks Ended   26 Weeks Ended   26 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Food and beverage revenue $ 308,907   33.6 %   $ 208,764     32.5 %   $ 286,142   40.4 %
Amusement and other revenue   610,553   66.4 %     434,214     67.5 %     422,039   59.6 %
Total revenue     919,460   100.0 %     642,978     100.0 %     708,181   100.0 %
                         
Cost of food and beverage (as a percentage of food and beverage revenue)     89,716   29.0 %     56,284     27.0 %     75,688   26.5 %
Cost of amusement and other (as a percentage of amusement and other revenue)     55,841   9.1 %     41,198     9.5 %     45,660   10.8 %
Total cost of products     145,557   15.8 %     97,482     15.2 %     121,348   17.1 %
Operating payroll and benefits   207,035   22.5 %     130,902     20.4 %     163,800   23.1 %
Other store operating expenses   266,865   29.0 %     189,561     29.4 %     210,621   29.8 %
General and administrative expenses     66,007   7.2 %     35,561     5.5 %     32,837   4.6 %
Depreciation and amortization expense   71,902   7.8 %     69,974     10.9 %     63,886   9.0 %
Pre-opening costs   6,910   0.8 %     3,335     0.5 %     11,725   1.7 %
Total operating costs     764,276   83.1 %     526,815     81.9 %     604,217   85.3 %
                         
Operating income     155,184   16.9 %     116,163     18.1 %     103,964   14.7 %
                         
Interest expense, net   28,509   3.1 %     28,548     4.5 %     8,661   1.2 %
Loss on debt refinancing   1,479   0.2 %         0.0 %       0.0 %
                         
Income before provision for income taxes     125,196   13.6 %     87,615     13.6 %     95,303   13.5 %
Provision for income taxes     29,124   3.2 %     15,210     2.3 %     20,504   2.9 %
Net income   $ 96,072   10.4 %   $ 72,405     11.3 %   $ 74,799   10.6 %
                         
Net income per share:                        
Basic $ 1.97       $ 1.51         $ 2.07    
Diluted $ 1.95       $ 1.47         $ 2.03    
Weighted average shares used in per share calculations:                        
Basic shares   48,705,956         47,937,158           36,117,815    
Diluted shares   49,357,051         49,272,693           36,803,001    
                         
                         
Other information:                        
Company-owned stores at end of period   200         142           130    
Store operating weeks in the period   4,047         3,450           3,290    
Total revenue per store operating weeks in the period $ 227       $ 186         $ 215    
                         
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown:        
                         
    26 Weeks Ended   26 Weeks Ended   26 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Net income $ 96,072   10.4 %   $ 72,405     11.3 %   $ 74,799   10.6 %
Add back: Interest expense, net   28,509         28,548              
     Loss on debt refinancing     1,479                   8,661    
     Provision for income taxes     29,124         15,210           20,504    
     Depreciation and amortization expense     71,902         69,974           63,886    
EBITDA   227,086   24.7 %     186,137     28.9 %     167,850   23.7 %
Add back: Loss on asset disposal   370         257           826    
     Impairment of long-lived assets   1,841                      
     Share-based compensation     8,253         6,158           3,732    
     Pre-opening costs     6,910         3,335           11,725    
     Other costs (1)     18,337         (30 )         33    
Adjusted EBITDA $ 262,797   28.6 %   $ 195,857     30.5 %   $ 184,166   26.0 %
                         
(1) Fiscal year 2022 amount primarily represents costs related to the acquisition of Main Event and subsequent integration costs.    
                         
                         
The following table sets forth a reconciliation of operating income to store operating income before depreciation and amortization for the periods shown:        
                         
    26 Weeks Ended   26 Weeks Ended   26 Weeks Ended
    July 31, 2022   August 1, 2021   August 4, 2019
                         
Operating income $ 155,184   16.9 %   $ 116,163     18.1 %   $ 103,964   14.7 %
Add back: General and administrative expenses   66,007         35,561           32,837    
     Depreciation and amortization expense     71,902         69,974           63,886    
     Pre-opening costs     6,910         3,335           11,725    
Store operating income before depreciation and amortization $ 300,003   32.6 %   $ 225,033     35.0 %   $ 212,412   30.0 %
                         

Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. Mango Bunch takes no editorial responsibility for the same.